As inflation is finally easing, wages continued to rise in July, reaching +8.1% in Quebec, beating the annual inflation rate.
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“It’s impressive to see wage increases that are close to inflation,” summarizes Hélène Bégin, Senior Economist at Desjardins Group.
On an annual basis, wages are now rising faster than the consumer price index.
Quebec inflation in July was 7.3% with an average hourly wage increase of 8.1% on an annual basis.
This is good news for the purchasing power of Quebec households, which are better off than the rest of Canadians. During the same period, inflation in the country reached 7.6%, but wage increases only 5.2%, an absolute loss in real income.
“It is certain that there is a special reality in Quebec,” says Simon Savard, senior economist at the Institut du Québec.
According to him and Mme Start with the labor shortageThe strongest in Quebec largely explains the wage gap here and those of other provinces. In Quebec, the unemployment rate is extremely low: 4.1% in July. In Ontario it is more than a percentage point higher.
GOOD FORCE RATIO
And “the more people we lack, the more we tend to adjust salaries,” explains Mme Begin.
In a tighter job market in Quebec, workers are better able to receive raises, but also to change jobs and thus receive better salary conditions.
According to Mr. Savard, we’ve seen a decline in employees in lower-paying positions since the pandemic. Despite some returns to normal, they have not returned to lower-paying positions.
There is also greater employment growth in the public sector, where jobs pay better on average.
This balance of power in favor of workers is of course useful to improve their situation, but also to counteract the impact of inflation on purchasing power.
According to Hélène Bégin, the current level of inflation and households’ expectations of future inflation have an impact on wage negotiations.
As a result, workers in Quebec are better able to push through pay increases and see their budgets squeezed less by inflation than elsewhere in the country.
IT WILL CONTINUE
With the Bank of Canada rate hike, Mme Bégin expects the Quebec economy and inflation levels to slow down.
But “rising wages will take some time to settle down,” she adds.
The Desjardins Group economist predicts that the unemployment rate will remain relatively low despite the economic turmoil. In the long term, she expects an unemployment rate of around 3.5%.
In their opinion, this situation should lead to wage increases continuing at a higher rate than inflation, by 3-4% with inflation reduced to 2%.
Annual salary increase from July
- Average in Quebec: +8.1%
- Health Sector : +12%
- Customer service : +11%
- Natural Resources and Agriculture: +15%
- Factory workers: +13%
- Average in Canada: +5.2%
Source: Statistics Canada
SOME BIG RECENT RAISES
- CPE Instructors: 15 to 20%
- Security Agents: 19 to 28% (over 5 years)
- Nolinor Flight Attendant: 36%
- Pascan Aviation pilots: 20%
Many workers are increasingly poor
Even though Quebec’s average wage increase in July exceeded a year’s growth in consumer prices, not all workers are benefiting.
“We can look at salary growth, but we also need to look at the relationship between executive salaries and average salaries in the organization. And the gap is widening,” said Caroline Senneville, President of the Confederation of National Trade Unions (CSN).
INEQUALITY IS GROWING
Several data on wage developments confirm the inequality lamented by the union president.
According to Statistics Canada, the average hourly wage in Quebec for the January-July 2021 period was $28.50 for all employees and $44.80 for executives.
Compared to 2022, executives received salary increases of 18.4%, but the average worker only received 6.1%.
Another indicator Daniel Boyer, President of the Québec Federation of Labor (FTQ), notes: the minimum wage just went up, but “only by 5.5%, we’re still below inflation”.
Many employees are also subject to a collective agreement. These have been recording a decline in purchasing power for several months, while their annual growth is limited to the usual 2%.
This is the case in the public sector, where certain key positions are difficult to fill. Speaking to the FTQ, Mr Boyer says 550,000 public sector workers have their contract which runs until next March. And there are also collective agreements in many other sectors that do not cover inflation. “There are a lot of people who have a lot of catching up to do,” said Mme Senneville.
Even if Quebec’s median salary continues to gain momentum, Daniel Boyer is concerned. He sees the cost of food and housing soaring and hopes to negotiate wage increases to maintain spending power. But getting there for all sectors is not certain.
According to him, several indicators suggest that there is a problem with wages: the multiplication of conflicts in the workplace or the increase of 40% of workers going to food banks.
“A dysfunction of the economy,” says Mme Senneville.